While plenty of high-yield opportunities exist, investors must always consider the safety of their dividend and the total return potential of their investment. It is not uncommon for a struggling company to suspend high-yielding dividends which could subsequently result in precipitous share price declines.
TheStreet Ratings' stock rating model views dividends favorably, but not so much that other factors are disregarded. Our model gauges the relationship between risk and reward in several ways, including: the pricing drawdown as compared to potential profit volatility, i.e. how much one is willing to risk in order to earn profits?; the level of acceptable volatility for highly performing stocks; the current valuation as compared to projected earnings growth; and the financial strength of the underlying company as compared to its stock's valuation as compared to its stock's performance.
These and many more derived observations are then combined, ranked, weighted, and scenario-tested to create a more complete analysis. The result is a systematic and disciplined method of selecting stocks. As always, stock ratings should not be treated as gospel — rather, use them as a starting point for your own research.
The following pages contain our analysis of 3 stocks with substantial yields, that ultimately, we have rated "Hold." TICC Capital Dividend Yield: 16.90% TICC Capital (NASDAQ: TICC) shares currently have a dividend yield of 16.90%. TICC Capital Corp., a business development company, operates as a closed-end, non-diversified management investment company. The firm invests in both public and private companies. The company has a P/E ratio of 10.25. The average volume for TICC Capital has been 331,300 shares per day over the past 30 days. TICC Capital has a market cap of $412.1 million and is part of the financial services industry. Shares are down 8.8% year-to-date as of the close of trading on Tuesday. EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE. TheStreet Ratings rates TICC Capital as a hold. The company's strengths can be seen in multiple areas, such as its increase in net income, expanding profit margins and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and disappointing return on equity. Highlights from the ratings report include:
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Capital Markets industry. The net income increased by 57.0% when compared to the same quarter one year prior, rising from $13.26 million to $20.82 million.
- The gross profit margin for TICC CAPITAL CORP is currently very high, coming in at 79.32%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 95.75% significantly outperformed against the industry average.
- Net operating cash flow has slightly increased to $19.49 million or 5.03% when compared to the same quarter last year. Despite an increase in cash flow of 5.03%, TICC CAPITAL CORP is still growing at a significantly lower rate than the industry average of 191.13%.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Capital Markets industry and the overall market, TICC CAPITAL CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- TICC's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 27.21%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Despite the heavy decline in its share price, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry.
- You can view the full TICC Capital Ratings Report.
- The revenue growth came in higher than the industry average of 5.7%. Since the same quarter one year prior, revenues rose by 23.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The gross profit margin for KCAP FINANCIAL INC is currently very high, coming in at 76.76%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 62.15% significantly outperformed against the industry average.
- KCAP FINANCIAL INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, KCAP FINANCIAL INC reported lower earnings of $0.43 versus $0.53 in the prior year. This year, the market expects an improvement in earnings ($0.71 versus $0.43).
- KCAP has underperformed the S&P 500 Index, declining 23.23% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- Net operating cash flow has significantly decreased to -$6.56 million or 166.57% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- You can view the full KCAP Financial Ratings Report.
- The revenue growth greatly exceeded the industry average of 2.9%. Since the same quarter one year prior, revenues rose by 28.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Net operating cash flow has slightly increased to $52.40 million or 8.28% when compared to the same quarter last year. In addition, CONSOLIDATED COMM HLDGS INC has also modestly surpassed the industry average cash flow growth rate of -0.54%.
- The gross profit margin for CONSOLIDATED COMM HLDGS INC is rather high; currently it is at 58.51%. Regardless of CNSL's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 4.05% trails the industry average.
- Although CNSL's debt-to-equity ratio of 4.34 is very high, it is currently less than that of the industry average. To add to this, CNSL has a quick ratio of 0.64, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. In comparison to the other companies in the Diversified Telecommunication Services industry and the overall market, CONSOLIDATED COMM HLDGS INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- You can view the full Consolidated Communications Ratings Report.
- Our dividend calendar.